One of the ugliest of hedge fund battles has come to a head in London, where a court is hearing a copyright infringement case over the proprietary algorithms at the heart of Ikos Asset Management.
Ikos co-founder Martin Coward and his estranged wife, Ikos chief Elena Ambrosiadou, have filed more than 40 lawsuits against each other in four countries. The two have accused each other of everything from spying to theft to all manner of other misdeeds, with Ikos and Ambrosiadou also seeking criminal charges against Coward and his associates. But the heart of the dispute is Ikos' computer trading system, which Coward says he created and which Ikos says he stole.
"Practically all of the financial markets expertise at Ikos resided in Coward," his lawyer, Michael Bloch, said yesterday at the start of a three-week trial. Coward, who quit Ikos in 2009 after Ambrosiadou fired his research team, was the "architect" and "bedrock of the family business," Bloch added.
"We have two very different stories," Bloch said. "In one of them, this was a family business…. According to Ms. Ambrosiadou, it was her business and the wealth was all hers."
Ambrosiadou, who lives in Cyprus, where the US$1.36 billion hedge fund is based, is set to testify at the trial later this week. No longer a defendant in the case seeking ownership of the algorithms, she and Ikos have repeatedly and vehemently denied Coward's claims, and have countersued him for copyright infringement.
Ikos said Coward, who went on to found his own hedge fund, was "caught red-handed stealing" its software, its "crown jewels, on which the entire business is based."
In court filings, Ikos took issue with Coward's claims to authorship of the algorithms.
"It is not in dispute that Dr. Coward was heavily involved in the genesis of the Ikos software in the early 1990s and wrote the code around that time," the hedge fund submitted. "However, Dr. Coward was always involved in the management of the business and so as Ikos grew he became less and less involved in the actual coding. Before long, it was other Ikos employees who were principally responsible for doing the coding."